The “Tiger Cubs,” those hedge funds spawned by Julian Robertson of Tiger Management, are growing in complexity as the family now extends into a fourth generation.
Keeping tabs on their investing activities is interesting and shows that as a group, now nearing 50 managers who are tracked and managing nearly $155 billion, they don’t overlap as one might assume.
The average overlap among the funds tracked by Novus stands at just 12 percent. But as a group their diversification strategy is color coded to show their generation. This also reveals a current bias towards consumer discretionary stocks, information technology and healthcare.
Tiger Cubs’ definite tendency towards large cap stocks
In terms of size, the Tiger Cubs show a definite tendency towards large cap stocks, which represent over 41 percent of their exposure, the highest of all stock size sectors. Mid cap and mega cap stocks follow closely to one another at over 29 and 23 percent respectively.
To consider the significance of overlap considerations, first look to the core of the long short strategy as defined by its creator.
“I believe that the best way to manage money is to go long and short stocks,” Robertson once said, according to Market Folly. “My theory is that if the 50 best stocks you can come up with don’t outperform the 50 worst stocks you can come up with, you should be in another business … For my shorts, I look for a bad management team, and a wildly overvalued company in an industry that is declining or misunderstood.”
Tiger Cubs individual positions opened
For the first time Novus has opened up the individual positions and connected them with the Tiger Management, the first generation; a Tiger Cub, the second generation group of funds; Tiger Grand Cubs, the third generation; and Tiger Seeds, the fourth generation of the strategy.
These funds follow a method of stock selection principles laid down by their thought leader, Robertson. “The first thing is, is the management decent and honest?” Robertson said in the interview. “A lot of people don’t really care about that. The way to look into that is to do some diligence.” Then Robertson outlined his second factor. “Competitiveness. Is he a competitor?”
Taking a look at the stock selection one wonders about adherence to the core principles, particularly in long short decisions. The group are all well known names, the ones that Gotham Research hasn’t attacked… yet.